Demand in Marketing 101

Demand refers to the customer's willingness and ability to purchase a given product. 

Understanding your target customer's type of demand is important for marketing managers for several reasons that include the following.

• To determine the best Marketing Mix aka the 4Ps (1 - product/customer solutions, 2 - price/customer cost, 3 - place/customer convenience and 4 - promotion/communication). Example(s):
• To know the appropriate levels of inventory to maintain. Afterall, excessive inventory levels carry costs associated with (spoilage-related) loss and storage expenses. Insufficient inventory levels can undermine your very successful efforts to attract more customers who ultimately go elsewhere when they can not get your product. In other words, this knowledge helps you to balance supply with demand. (See operations management / OM)
• To know the appropriate messaging.  
• To make presentations like business plans that require trustworthy forecasts.

The 8 types of demand follow. Identify the type(s) of demand each of your products and or services have. You will then need to decide on the appropriate response.

NEGATIVE DEMAND occurs for products that are not generally liked. People use the products only because they have to, often because they want to avoid negative outcomes. Examples of products for which negative demand is common include the following. Marketers often respond to this type of demand brand awareness tactics over outright promotion. They often limit their promotion to informing customers about the importance of their product.

• Surgery
• insurance policies that obviously involve thinking about bad things happening
• funeral planning
• diagnostic medical examinations for life threatening diseases.

NON-EXISTING DEMAND is as the name suggests. Example(s):

• High speed race cars in a mountainous rural farming region. Marketers ought not expend time and effort trying to sell race cars to the village folk who are content with riding their horses. 

LATENT DEMAND exists but, for some reason can not be acted upon by the customer. There are 3 reasons why this happens. 1 - Customers do not have sufficient money for the product. 2 - The product is not available. 3 - The customer does not yet know about his or her need and or the existence of the product solution. Examples: 

• Lack of knowledge. Technological products or features the customer does not know about. People might buy a cheaper phone, computer, etc without realizing that they would need certain features found in the more advanced one like camera power, speed, space and so on. Some people continue using old versions of MS Windows until they realize that things they need to be done in the technologically advancing internet are not accessible to them if they do not switch to the latest version.
• When customers have latent demand for expensive products, furniture, vehicles, real estate and so on, sellers often offer finance options to help resolve the problem that stands between the customer and his ability to act on his demand.

DECLINING DEMAND can occur when products reach the declining stage of their product life cycle.  This may occur because of technological advancement and new more intriguing competitors into your industry. Example(s):

• CD players (when USB thumb drives and cloud storage became available), alarm clocks (when mobile phones offered in-buiilt alarm systems), photographic film (when digital photography because popular). Marketers have best results by finding innovative ways of re-marketing, re-branding and re-positioning the product.
• See Old Spice case study in which that brand re-branded and re-positioned its brand. 

IRREGULAR DEMAND most occurs for products that are seasonal, occur at intervals like monthly or fortnightly and so on. Example(s):

• It is ony when a customer's subscription has expired every x months that their demand occurs. In response, marketers may use CRM with reminders for subscription renewals. 

FULL MARKET DEMAND is the ideal. Specifically, the market likes and wants to continue buying your product. Additionally, you are producing to your supply capacity. Marketers in this scenario need to maintain interest in their product. 

OVERFULL DEMAND occurs when demand exceeds your supply. Example(s):

• Restaurants may have clients waiting in a line to place an order. Automated orders, quicker meal production and more seating or take out are likely solutions that a marketer can devise. In other words, your operations management / OM manager needs to figure out how to improve the supply chain.
• Marketers may use their CRM to encourage customers to join waiting lists. Depending on the circumstances, like the uniqueness of the product and levels of perceived need, marketers might even want to use scarcity marketing while they improve their supply chain.

UNWHOLESOME DEMAND occurs for products that have undesirable social or other consequences. Example(s):

CONTENT RELATED TO DEMAND IN MARKETING 101

• Price Elasticity of Demand
• Business Plan. Discuss the demand for the product or service you are proposing.
• Operations management / OM